aspects of these ideas if they can discuss them a little.
Exchange
A. Partial equilbrium — theory of single market
78 Chapter Highlights
Chapter 32 79
B. General equilibrium — interactions among many markets
C. We do pure exchange first, then production
D. Edgeworth box
1. Figure 28.1.
2. allocation
E. Trade
1. move to Pareto preferred point
F. Pareto efficient allocations
1. where trade stops — no mutual improvement possible
G. Market trade
1. specific way to trade — using price system
H. Algebra
1. only one of the markets needs to clear
I. Efficiency
1. does the market exhaust all the gains from trade?
2. is the market outcome efficient?
J. Meaning of First Welfare Theorem
1. implicit assumptions — no externalities
80 Chapter Highlights
K. Meaning of Second Welfare Theorem
1. prices play allocative and distributive role
2. use market for allocative role and income redistribution for distributive
role
3. but problems in production economy
Chapter 32 79
B. General equilibrium — interactions among many markets
C. We do pure exchange first, then production
D. Edgeworth box
1. Figure 28.1.
2. allocation
E. Trade
1. move to Pareto preferred point
F. Pareto efficient allocations
1. where trade stops — no mutual improvement possible
G. Market trade
1. specific way to trade — using price system
H. Algebra
1. only one of the markets needs to clear
I. Efficiency
1. does the market exhaust all the gains from trade?
2. is the market outcome efficient?
J. Meaning of First Welfare Theorem
1. implicit assumptions — no externalities
80 Chapter Highlights
K. Meaning of Second Welfare Theorem
1. prices play allocative and distributive role
2. use market for allocative role and income redistribution for distributive
role
3. but problems in production economy